Predicted Capacity Growth Threatens To End Best Tanker Spot Rates Since 2009

by Ship & Bunker News Team
Thursday August 20, 2015

A predicted rise in crude tanker capacity over the next two years could put a halt to the sky-high rates that the industry is currently enjoying, Drewry said in an emailed report. 

According to separate reports, current spot rates for product tankers are the highest they've been since 2009, a trend which has been buoyed by companies stocking up on crude while prices are weak. 

Annual growth of the global tanker fleet is reportedly expected to accelerate from 0.7 percent in 2014 to around 5 percent over the next two years.

Capacity is also expected to reach 377 million DWT by the end of 2017, with 42 million DWT of capacity having been ordered since 2014. 

"Lower bunker prices continue to support vessel earnings and increased ordering of large vessels reflect optimism in the market," said Rajesh Verma, Drewry's lead analyst for tanker shipping.

"So long as ship-owners abstain from excessive ordering in the coming years, we can expect fleet growth to slow after 2017, which in combination with the prospective increase in global oil trade will lead to some longer term recovery in crude tanker earnings."

Drewry added that it expects the strengthening of the global oil trade to come from rising US crude imports and an increase in Asian refining capacity.

Strong freight rates have been a boon for many tanker companies including Tanker Investments, who reported earlier this month that it expects improving performance to continue into 2016. 

Ship & Bunker News Team
To contact the editor responsible for this story email us at editor@shipandbunker.com